There is no limit to the number of individual retirement accounts (IRAs) that you can establish. But you'll still be subject to your annual maximum contribution limits, so you cannot simply max out each account that you have.

In other words, if you have two IRA accounts, you can contribute the maximum amount between the two of them. In 2020 and 2021, you can contribute a maximum of $6,000 per year to an IRA. If you had two IRA accounts, for example, you could split the $6,000 and deposit $3,000 in each account, but no more than $6,000 combined.

Also, you must also have eligible compensation, which includes wages, salary, or self-employment income for any year you contribute. That leaves out income from things like pensions, annuities, interest, dividends, and rentals.

Key Takeaways:

  • There is no limit to the number of traditional individual retirement accounts, or IRAs, that you can establish.
  • However, if you establish multiple IRAs, you cannot contribute more than the contribution limits across all your accounts in a given year.
  • If your spouse has little or no income, you can contribute on their behalf, which can double the amount saved for retirement.
  • Each account may have associated fees that affect the returns on the accounts overall.

Understanding IRA Accounts

There have been changes to IRA accounts in recent years. In December of 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act went into effect. The SECURE Act eliminated the maximum age for traditional IRA contributions, which was previously capped at 70½ years old. 

A Roth IRA can also be established at any age, as long as you have eligible compensation and meet the income requirements. A Roth IRA doesn't provide a tax deduction in the years that contributions are made but allows for tax-free withdrawals in retirement as long as the person is over the age of 59½ and the account has been opened for more than five years.

Conversely, a traditional IRA provides a tax deduction in the years that the contributions are made, but the withdrawals in retirement are taxed at the retiree's income tax rate in the year of the distribution.

IRA Contribution Limits

Keep in mind that regardless of the number of IRAs you maintain, you still cannot contribute in total more than the annual contribution limits. For 2020 and 2021, you are allowed to contribute 100% of your compensation up to $6,000 per year to an IRA. If you're aged 50 and over, you can contribute an extra $1,000 as a catch-up contribution for a total of $7,000 per year.

All regular IRA contributions must be made in cash (which includes checks), not in securities. You can divide up the permitted contribution among your IRAs or contribute the whole amount to one IRA.

Roth Income Limitations

The Roth IRA has income limitations, meaning that if you earn over the limit, you will not be able to contribute to a Roth, or your contributions could be phased out or limited. The income phase-out range also depends on your tax filing status.

For the 2020 tax year, if you are filing taxes as single, you couldn't contribute to a Roth IRA if you earned more than $139,000. The income phase-out range for 2020 contributions was $124,000 to $139,000. In 2021, contributions from singles can't be made to a Roth if your income exceeds $140,000 in 2021. The income phase-out range for singles is $125,000 to $140,000.

For married couples who file a joint tax return, the maximum you could contribute to a Roth in 2020 was $206,000 and, in 2021, is $208,000. The 2020 income phase-out range was $196,000 to $206,000, and for 2021, it's $198,000 to $208,000.

Spousal Contributions

If your spouse has little or no income, you are allowed to make contributions on their behalf—commonly known as spousal IRA contributions. The same rules apply as those for traditional IRA contributions. Your spouse will have their own IRA account since IRA accounts are not allowed to be held jointly. This allows a family to double the amount of money set aside for retirement.

Here are the requirements for opening a spousal account:

  • You must be married and file a joint tax return.
  • You must have eligible compensation to make contributions.
  • The total contribution for both you and your spouse cannot be more than your taxable compensation reported on your joint tax return.

Special Considerations

If you decide to establish multiple IRAs, remember that annual maintenance fees may apply to each IRA. These fees can average from $50 to $100 per year. Fees can eat into your returns, so it is important to be knowledgeable about all of your retirement account fees.